Three months after the beginning of the fiscal year, California Governor Arnold Schwarzenegger and legislative leaders of both parties struck a deal
on how to balance a budget that started with a $19 billion deficit. Legislators could vote on the pact as soon as Thursday.
The agreement calls for no new taxes and fewer spending cuts than Schwarzenegger, a Republican, originally proposed. But it also relies on rosy economic forecasts and an infusion of financial aid from the federal government, both of which are far from guaranteed.
Even getting the budget to the governor could be tricky, notes the Los Angeles Times
. The legislative vote on the budget would come just one month before legislators face voters in the November elections, and many of the provisions of the budget, such as cuts in education funding, could be unpopular with the public.
"It's hard enough to do the sausage-making in the best of times," Democratic political strategist Chris Lehane told the paper. "It's incredibly difficult to do the sausage-making with four weeks to go from an election."
Already, some rank-and-file members are skittish about the details of the budget agreement that have been released, writes The Wall Street Journal
. "The budget is on shaky legs," Assemblyman Jim Beall, a Democrat, told the Journal
.Beall worries that the final budget will include more tax breaks for businesses, while Republican senator Tony Strickland said he worried about provisions that cut funding for schools and that suspend a planned tax break for businesses.
Even if a bill does pass this week, the total cost to taxpayers for California's longest-ever budget standoff won't be known for months, points out the San Francisco Chronicle .
That's because the state needs to borrow money from Wall Street, and the interest rates on those loans depend on how credible investors think California's budget really is.